Employees In Maryland Can Now Get Treble Damages For Overtime Claims

Executive Summary: On August 13, 2014, the Maryland Court of Appeals held in Peters v. Early Healthcare Giver, Inc. that unpaid overtime wages are recoverable under the Maryland Wage Payment and Collection Law (MWPCL or "Wage Payment Act"). The ruling increases the potential liability for Maryland employers who misclassify their employees as exempt under the Maryland Wage and Hour Law (MWHL) and the federal Fair Labor Standards Act (FLSA). Employees who prove an entitlement to overtime pay can now seek an award of treble damages or three times the amount owed to them in unpaid overtime wages. Although an employer can avoid a treble damages award by proving that there was a good faith "bona fide dispute" over the validity of the employee's overtime claim, the court in Peters held that the employer has the burden of proof on the "bona fide dispute" issue.

Background

In Peters, the plaintiff claimed she consistently worked almost 60 hours each week but was not paid at a time-and-one-half rate for each hour over 40 in the week as required by state and federal wage and hour laws. She sued her employer for overtime wages under the MWHL while also seeking to have any recovery of overtime pay trebled pursuant to Section 3-507.2 in the Wage Payment Act.

Prior to the Peters decision, the plaintiff's MWPCL claim would have been summarily dismissed. Courts had consistently construed the Wage Payment Act as regulating the timing of wage payments upon termination and not whether overtime pay was due at all. See Fisher v. Rite Aid Corporation, 2010 U.S. Dist. LEXIS 56383 (D. Md. 2010); Williams v. Maryland Office Relocators, LLC, 485 F. Supp. 2d 616 (D. Md. 2007); McLaughlin v. Murphy, 372 F. Supp. 2d 465, 474-75 (D. Md. 2004).

The pertinent legal issues were summarized concisely in McLaughlin v. Murphy. The federal court dismissed the plaintiff's claim for overtime pay under the MWPCL, stating:

The MWPCL limits the availability of treble damages . . . to violations of § 3-502 or § 3-505. Section 3-502 deals with the timing of payment, and Section 3-505 deals with payment on cessation of employment. In contrast, McLaughlin's minimum wage and overtime claims are based on his entitlement to the wages themselves. He does not allege that [his employer] failed to pay him regularly, but that it failed to pay him enough; and he does not allege that [his employer] failed to pay him minimum wage and overtime due him upon his termination, but that it failed to pay...